Jobs (not Steve) and Structural Underinvestment

In this week’s New Yorker, James Surowicki has a new post on the state of the economy and employment levels. Before completely dissembling the argument that the US is seeing a tectonic structural loss of jobs, he does a nice job of setting up the straw man:

Why have new jobs been so hard to come by? One view blames cyclical economic factors: at times when everyone is cautious about spending, companies are slow to expand capacity and take on more workers. But another, more skeptical account has emerged, which argues that a big part of the problem is a mismatch between the jobs that are available and the skills that people have. According to this view, many of the jobs that existed before the recession (in home building, for example) are gone for good, and the people who held those jobs don’t have the skills needed to work in other fields. A big chunk of current unemployment, the argument goes, is therefore structural, not cyclical: resurgent demand won’t make it go away.

Hook, line and sinker. Whether in the Bay Area, New York, Philly or anywhere else First Round has investments, 2010 was more challenging than 2009 when it became more challenging to recruit candidates to new roles within our portfolio. Contrary to the broader economy, in the seed capital world there were too few people chasing too many jobs. My favorite anecdotal Bay Area economic indicator (rising commute times on 101), seemed to represent this as well.

Surowicki goes on to make a strong case that we’re probably not seeing structural employment loss. He points to a number of times in history when this argument has been made (the Great Depression, the early 80′s) and it turned out not to be the case. Proponents of the structural job loss paradigm may simply be looking at job data in a far too localized (sector, geography, time period) manner. I can buy this argument, or at least, I can buy this argument until we have significantly more data to review in a few years. But what I can’t stomach is Surowicki’s closing argument (emphasis mine):

Structural issues aren’t irrelevant, of course; there are certainly plenty of construction workers who are going to have start plying a new trade. But what defined the recent recession was the biggest decline in consumption and investment since the Depression. Dealing with that is the place to start if we want to do something about unemployment. The structural argument makes government action seem irrelevant. But if we don’t do more to get the economy back up to speed, it won’t be because stimulating demand won’t work. It will be because we’ve chosen not to do it. If we can’t find the way, it’s because we don’t have the will.

Presumably, he’s making the case against structuralist doom & gloom by arguing for greater fiscal stimulus in lieu of structural investment. The implication is that those making the structural argument don’t have the fortitude to spend what is required to jump start the economy. I take issue with this. The structural argument makes government action seem MORE relevant. It is precisely the job of government to provide the infrastructure required to educate and train it’s citizenry. Government action, whether investment in our schools or financial support for students is highly relevant. We certainly have the will to spend and the want for government stimulus. Do we have the will to really invest in education and jobs training? If Surowicki’s right, we’ll find out once everyone has gone back to doing what they did before they recently stopped doing it.